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Three Arrows Capital(3AC)

Three Arrows Capital(3AC) Overview

What is Three Arrows Capital(3AC)? What projects does Three Arrows Capital’s portfolio include? What is the investment style of the 3AC fund?

Three Arrows Capital (3AC) has long been a well-known and familiar name in the crypto market. This investment fund has invested in a lot of big deals in the crypto market, and has two extremely famous founders, Su Zhu and Kyle Davies.

So how is Three Arrows Capital an investment fund? What projects does Three Arrows Capital’s portfolio include? What is the investment style of Three Arrows Capital? Let’s learn all about Three Arrows Capital through the following article.

Three Arrows Capital Overview

Three Arrows Capital (3AC) is a hedge fund, founded in 2012 and focused on finding high returns with low risk, founded by Su Zhu and Kyle Davies.

In the beginning, Three Arrows Capital is not a fund that invests in crypto but a fund that hedges assets such as foreign currencies (also known as forex speculation), looking for arbitrage opportunities in the forex market. , as well as looking for opportunities on derivatives exchanges.

Three Arrows Capital’s investment strategy is to target emerging asset markets, especially cross-border asset markets.

In an interview, Kyle Davies said that he strongly believes in the potential of cross-border financial markets with the emergence of new asset classes, many different asset classes, accessible by many more people.

He believes that Three Arrows Capital can profit from the accessibility of these assets, as they will quickly outpace other asset classes.

Around 2013, they started to pay attention to the crypto market and became a hedge fund in the market looking for arbitrage opportunities. Gradually, they not only arbitrage anymore, but also engage in long-term investing and invest early in projects in the market.

During a livestream with UpOnly channel, Su Zhu also shared that 3AC invests in the crypto market according to the long-term investment method.

They invest in projects with a “Go billion or go zero” mentality, ie great success or ready to lose their investment, not that they release the private tokens they buy to adversely affect their projects invest.

Team Three Arrows Capital

Three Arrows Capital was founded by Su Zhu and Kyle Davies, so in the next part, I will go through the profiles of these two VC founders with you.

Kyle Davies

Kyle Davies knows 4 languages (English, French, Japanese, Thai), attended Colombia University in New York City, and in September 2009, he started as a trader at Credit Suisse.

After nearly 3 years working here, realizing the great potential in investing in cross-border asset markets such as currencies of countries, commodities and arbitrage opportunities between different regions of the world due to Due to their fragmentation, Kyle and Su Zhu jointly founded Three Arrows Capital.

Since then, for 9 years, he has been the CEO of this investment fund.

Kyle Davies’ Twitter account: https://twitter.com/kyled116

Su Zhu

Su Zhu also studied at Colombia University in New York City, and then began working as a trader for nearly three years.

In 2009, Su Zhu started working as a trader at Flow Traders for more than 2 years, then he moved to become a Trader for Deutsche Bank – Germany’s largest private banking group for 9 months.

After that, he quit and founded Three Arrows Capital with Kyle Davies and held the position of CEO/CIO of 3AC for nearly 10 years. In addition, Su Zhu is also the Co-Founder of Sensus Markets.

Su Zhu’s Twitter account: https://twitter.com/zhusu

Three Arrows Capital Portfolio Overview

Three Arrows Capital Portfolio Overview

You can check out Three Arrows Capital’s portfolio through the image above. Next, we will take a look at a few outstanding projects of each Sector.

All of the projects mentioned below have informative articles on Coin98 Insights, if you are interested in any project, you can search for the project name to learn more!

Layer 1 and Layer 2 projects

3AC invests in many Layer 1 projects, and highlights are:

  • Avalanche: In June 2021, 3AC and Polychain led a $230 million investment round in the Avalanche ecosystem, to accelerate DeFi development on this ecosystem. They are not early investors in the platform.
  • Solana: I also couldn’t find information about 3AC investing directly in Solana.
  • Polkadot: Currently, there is no information about 3AC investing in Polkadot from or over what period of time.
  • StarkWare: 3AC invested in the project from Series B, and also participated in Series C. This is a Layer 2 project using ZK-rollups that has completed a $50 million fundraising at a $2 billion valuation.
  • This Series C deal was spearheaded by Sequoia Capital, joined by multiple funds including 3AC in mid-November 2021.

⇒ Comment: 3AC has quite a lot of notable investments in Layer 1 projects, and these projects are all performing very well in this 2021, when Layer 1 solutions continuously explode and grow. .

Other Layer 1 investments announced by 3AC include Mina Protocol and Kusama, and if the above are indeed all Layer 1 projects they invest in, then 3AC’s Layer 1 portfolio is truly outstanding with its quality. All the famous Layer 1 names in the market.

Game

3AC has announced investments in two game projects:

  • Axie Infinity: Three Arrows Capital invested in Axie Infinity at a 20% discount from market value in a funding round of the project and many other funds. In this round, Axie raised only $860,000 at an AXS price of 0.08.
  • Nyan Heroes: Following the success of Axie, this is the number two project in the gaming segment announced by 3AC. The deal just happened recently.
  • Avocado Guild: A game guild on Solana, successfully raised $18 million at a $200 million valuation, at the end of November 2021. The project has only been in operation for 6 months now.
  • Solice: A Metaverse project on Solana raised $4.36 million at the end of November 2021 for their seed round. Participating funds include 3AC, Animoca Brands, and DeFiance Capital.

⇒ Comment: 3AC does not pay much attention to the gaming segment. Even the successful gaming deal of the first 3AC was recognized by Su Zhu as luck. After that, 3AC also started to allocate and invest in other projects in the game segment such as Nyan Heroes.

AMM DEX

3AC has announced investments in AMM DEX projects including:

  • TraderJoe: The DEX exchange leads the Avalanche ecosystem, with over 1 billion USD TVL in the protocol at the moment. This is a recent investment deal.
  • Sushi: Uniswap V2 DEX fork, currently the number two largest DEX in the market, running on 16 different chains and TVL with over $6.7 billion at the moment.
  • Kyber: Kyber Network had a successful ICO of $60 million at the end of September 2017, and is one of the first generation decentralized exchanges.
  • Orca: A decentralized exchange (DEX) developed and operated on the Solana platform, currently in the top 5 TVLs on Solana. This DEX also has many very special strategies in how to use NFT to attract users to use the protocol.
  • WOO: A DEX exchange operating under the orderbook mechanism, raised capital in September 2020.
  • Balancer: One of the early DEXs, with a huge user base and TVL volume on Ethereum.
  • DODO: A decentralized exchange with a new On-chain liquidity solution combining AMM and Oracle called PMM – Proactive Maket Maker. 3AC participated in DODO’s $5 million funding round in October 2020.

⇒ Comment: 3AC not only invests in AMM DEX on Ethereum (like DODO, Kyber, Balancer, Sushi) but also invests in many AMM DEX on many other chains like Orca, TraderJoe – big players on Solana and Avalanche.

These are also the two ecosystems where they invest heavily in the platform token.

In addition, 3AC also invests in many other names in this field such as Clipper, WOOTrade, Nerve,…

Synthetic/ Derivatives/ Margin

3AC has announced investment in projects in this segment including:

  • Synthetix: A top 1 protocol in the synthetic asset release category. This is the leading project in this area, on Ethereum.
  • dYdX: Protocol is at the forefront of Derivatives across the market.
  • Perpetual Protocol: Protocol top 2 in the Derivatives segment in the market.

⇒ Comments: 3AC started as a hedge fund in the forex and Derivatives assets, and the 2 founders also worked in hedge funds for a long time as traders, so they certainly have a lot of money. Extensive experience in investing in derivative products and synthetic assets.

In addition to the above 3 projects, they also invest in many projects in this field such as dTrade, Bonfida, DerivaDEX, Futureswap.

Because 3AC has a lot of experience in derivatives trading, and the fund itself was born a derivative hedge fund, 3AC is quite “cool” when it has invested in both leading derivatives projects, dYdX and derivatives. Perpetual, and the leading project in the Synthetic segment is Synthetix.

Lending Protocol

3AC invests in projects in the Lending segment:

  • Jet Protocol: Money market on Solana, just successfully raised $6.8 million with the participation of 3AC.
  • Aave: Top Money Market in the market, already working on multiple chains outside of Ethereum, including Polygon and Avalanche.
  • Ardana: Debt Protocol on Cardano, the deal was just completed and announced not long ago.
  • mStable: A Debt Protocol on Ethereum.
  • MeanDAO: A lending protocol built on Solana. Newly announced project 3AC, SoftBank, DeFiance led the investment round worth $ 3.5 million at the end of November 2021.

⇒ Comments: 3AC has made many investments in many lending protocols on many different platforms, in both money market and debt protocols.

In addition to Aave, the remaining protocols are not the leading players in the ecosystem at the moment, including two new deals: Jet Protocol and Ardana. You can research the above two projects to find investment opportunities.

Asset Management

3AC invests in projects in the asset management application segment, which can be divided into smaller segments including: decentralized investment trust, yield farming, staking solution, and index projects in market.

  • dHedge: One of the top decentralized investment trust projects on Ethereum. The deal has been going on since the end of 2020.
  • Tranchess: A BTC asset management project through the method of risk division for participants, operating on BSC, with a relatively large TVL. The deal takes place in mid-2021.
  • Lido: Staking solution for ETH and Terra, currently the strongest player in this segment.
  • pStake: Another staking solution built on the Persistence One ecosystem on Cosmos. They successfully raised $ 10 million in November 2021 from many large funds including 3AC, Sequoia, DeFiance,…
  • Volmex: An indexing project on Ethereum.

⇒ Comment: 3AC only bets on one project in each small segment in the asset management category, there is no competition among the players they invest in. This helps them to be ready to support the above projects, without facing conflict between the interests of the parties in the process of supporting the project.

Other puzzle pieces

In addition, 3AC invests in other pieces such as:

  • Manta Network: A Private Layer Project on Polkadot.
  • Neon: A piece of infrastructure on Solana that allows the use of tools on Ethereum to interact with liquidity on Solana.
  • Worldcoin: A crypto asset project that distributes free to users by scanning eyeballs.
  • Blockfi: Centralized crypto exchange, operating in the US.
  • Deribit Exchange: A major futures and options exchange in the market.
  • Fireblock: An application that provides all-in-one blockchain solutions for financial funds.

⇒ Comment: 3AC also invests heavily in centralized exchanges in the world such as Blockfi, Deribit or Fireblock.

Reviews & Reviews

Looking at 3AC’s portfolio, you can see the following characteristics through 3AC’s portfolio:

  • The deals that 3AC focuses on are mainly projects located on Ethereum. Of the 22 protocol projects they invest in (ie, excluding Layer 1 deals, equity investments), 17 are on Ethereum.
  • Layer 1, AMM DEX and Derivatives are the 3 areas where they have the most notable deals, in which, especially in the Derivatives segment, they invest in many leading players.
  • In particular, in Layer 1 projects, they have many investments in many emerging layer 1, including Solana, Polkadot, Avalanche – layer 1 has a market cap of over $19 billion.

Drama between 3AC and Ethereum

In November 2021, 3AC’s wallet was tracked to transfer more than 17,000 ETH to the FTX exchange. Su Zhu also acknowledged the 3AC fund’s move to sell ETH, citing a loss of confidence in Ethereum – due to high fees and poor user experience, and he said that the Ethereum community doesn’t care about it. deal with this problem, he believes in other Layer 1 solutions.

He also clarified that he still supports projects on Ethereum and still thinks that investing in Ethereum is a right move by 3AC, but it’s just that he doesn’t believe in Ethereum anymore. This move also comes when the AVAX price is growing strongly, leading many to question whether this is a ploy to push the price of Su Zhu.

However, Su Zhu’s “do not believe in Ethereum” thesis has been evident in 3AC’s recent investments, where deals were mainly on Avalanche and Solana.

Relationship between 3AC and other investment funds

3AC not only invests in projects by itself, but also invests in investment funds to take advantage of their own strengths such as:

  • DeFiance Capital: A large investment fund in the crypto market, received investment from 3AC.
  • Multicoin Capital: An investment fund with many successful deals in layer 1 such as Solana, Thorchain,…
  • Other investment funds such as DACM, PLAY, Hypersphere.

⇒ Comment: 3AC has a close relationship with many large investment funds in the market, investing in funds to “take advantage” of their ability to analyze and evaluate projects in their strengths, to take full advantage of their strengths. efficient use of capital and human resources.

Three Arrows Capital Portfolio Review

Performance

Most of the projects invested by Three Arrows Capital already have products and tokens. The top 5 projects with the best performing Tokens (current price compared to the starting price of 2021) are:

  • AXS (Axie Infinity): 30,000%.
  • SOL (Solana): 15,000%.
  • WOO (Wootrade Network): 3,500%.
  • PERP (Perpetual Protocol): 2,000%.
  • DOT (Polkadot): 1.100%.

Investment Trends of Three Arrows Capital

Investments of Three Arrows Capital in 2021

Three Arrows Capital is operating relatively enthusiastically in 2021, with investment down to 17 deals from the beginning of 2021 to now, compared to the number of 13 projects of Binance Labs, but still far behind the number of 37 projects. projects of Pantera Capital and about 30 projects of Spartan Group.

This year, instead of focusing on investing in infrastructure projects and Layer 1 and projects on Ethereum as in the past, they have invested more in applications located on other platforms, including including Gaming, DeFi on other ecosystems such as Cardano, BSC, Solana or Avalanche.

In addition, you can see that, since the beginning of the careers of the two founders are traders and the beginning of 3AC is a hedge fund forex and derivatives, the Derivatives segment is extremely focused by 3AC and invested in both players. The main ones on the market were dYdX and Perpetual from a very early time as I mentioned above.

It is likely that, after the money has flowed through the AMM, Stablecoins and other lending and borrowing applications in the market, derivatives and margin trading will be the next place where the money in the market is headed.

Derivatives in the traditional market are worth $3.2 trillion, and the crypto derivatives market is just a tiny fraction of that. Therefore, it is possible for money to flow through derivatives.

Summary

Through the above analysis, the following conclusions can be drawn about 3AC’s investment style:

  • 3AC invests in projects with a “Go billion or go zero” mentality, which means great success or “about mo” of the investment.
  • Previously, the deals that 3AC focused on were mainly projects located on Ethereum (17 out of 22 protocols). But by mid-2021, they have invested heavily in other platforms such as Solana, Avalanche, BSC,… in various fields such as DeFi, Gaming,…
  • The Derivatives segment is focused on investing in many of the top players. 3AC’s derivatives investments are successful when they get involved in the project early on and invest in the right top cards in the market.

Above is an overview of the Portfolio and some comments on investment trends of Three Arrows Capital, if you have any other questions or comments, please comment below to discuss with idolmeta.net !

 

 

 

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